Section 6: Future Support for Less Favoured Areas (LFASS)

Introduction

130. Support for Less Favoured Areas (LFA) is important to both the rural and remote communities throughout Scotland and has been provided since the 1970s. 85% of agricultural land in Scotland is currently designated as LFA and LFASS supports some 11,500 farming and crofting businesses through an annual budget of £65.5 million.

131. As outlined in the stage 1 consultation, the draft RDR proposes that Member States must introduce a new area designation called Areas facing Natural Constraints (ANC). Political agreement has now been reached on the draft RDR, which allows for the implementation of the new ANC designation by 2018 at the latest.

Legal basis

132. RDR article 32, and article 33 for the redesignation to ANC. The European transitional arrangements will also be used to continue with the current LFA land designation until such time as the work necessary to redesignate to ANC is complete (by 2018 at the latest).

Rationale

133. The draft RDR states that payments to farmers and crofters in constrained areas should contribute, by encouraging the continued use of agricultural land, towards the maintenance of the countryside as well as maintaining and promoting sustainable farming systems.

134. Hill farming has long been a key activity in Scotland, forming an important part of rural life. Livestock farming remains the dominant form of agriculture carried out in Scotland and it and the related activities in livestock production, meat processing as well as tourism all generate significant income for Scotland. Beyond contributing to sustaining the rural economy, continued farming in these areas makes important contribution to the environment, as much of it is High Nature Value, along with the beautiful landscapes that Scotland is renowned for.

135. A Scottish Natural Heritage led report[10] on economically vulnerable farming points to evidence in hill farming systems of declining livestock numbers, issues recruiting labour, long working hours, variable and volatile incomes, and a trend towards partial or complete land abandonment in areas. The researchers also emphasise the importance of support payments for these farms.

136. There have been calls from some for LFASS to be simplified, and more targeted and focused. We will be considering this when redesignating to ANC. The Commission have indicated that to comply with WTO rules any future support can only be provided in order to continue the farming activity, and no explicit environmental conditions are to be placed on farmers and crofters. However LFASS and its successor will help ensure the land can continue to be managed in a way that is beneficial to the environment whilst at the same time helping to sustain our rural communities.

137. Given the importance of this support to a crucial part of the agricultural sector, we believe it must continue. Failure to provide this will risk damaging our communities, our environment and our rural economy at a time of significant change.

Financial allocation

138. It is estimated that LFASS payments for the 2014 transition scheme year will be roughly equivalent to the current budget of £65.5 million. Until the final regulations are agreed and the impact of the change to ANC is known it is not possible to estimate budgets for future years with any certainty. However, based on an assumption of a budget requirement comparable to current levels, 35% of the total future SRDP budget will be directed towards LFA/ANC support.

Targeting

139. Support will be targeted to farming and crofting businesses in areas in Scotland that have been identified as less favoured or constrained. As stated above the introduction of ANC will require the LFA area to be reviewed to ensure that the land identified meets EU criteria. On mapping work undertaken to date almost all of the current LFA area comes into the new ANC. For those small but potentially important areas falling out of the initial ANC designation there may be solutions to ensure their support continues and we will seek to address this, as we have done throughout the negotiations with Europe.

Timing

140. The EC has accepted the necessary legislation will not be agreed in time to allow the new SRDP to launch on 1 January 2014. Therefore, they have produced draft Transitional Regulations which allow some elements of support to continue through 2014. This has confirmed that LFASS will continue in 2014 under current rules with a 2015 payment date as normal.

141. We intend to also continue LFASS in 2015. However, we need to carefully consider the options around future LFA support, including what will be permitted by Europe. In order to do this, we will need the detailed implementing regulations which we hope to have later this year.

142. This will allow us to more fully consider the impact of the introduction of ANC and the options for future LFA support, and give enough time for effective design and implementation. We will continue to work with stakeholders throughout this process and will issue a separate consultation once the details and options for Scotland are clear.

Question 3

Should support for farmers operating in constrained areas be continued through the SRDP? Please tick the appropriate box in the online questionnaire.

Yes No Other, please specify (in the space given in the online questionnaire).